HKUST Business School Magazine

Family businesses include a wide range of businesses from small owner operations to large listed companies, which are significant contributors to the economies of Asia and the world. According to a report by Deloitte in Spring 2022, companies that are owned and controlled by families account for 2/3 of all businesses, 70- 90% of annual global GDP and 50-80% of jobs in most countries. These businesses often have a long-term perspective and a strong sense of responsibility towards their employees, customers, and communities. Family businesses in Asia are increasingly recognizing the importance of sustainable finance. According to a survey by UBS, 77% of family businesses in Asia believe that ESG factors are important to their investment decisions. This is in line with global trends, where sustainable finance is becoming an increasingly important consideration for investors. This article explores the intersection of family businesses and sustainable finance in Asia, and why family businesses can benefit from first mover advantage in sustainability. First Mover Advantage? Family Businesses and Sustainable Finance By Professor Veronique J.A. LAFON-VINAIS Associate Professor of Business Education Department of Finance HKUST Business School Part I: Rise of Sustainable Finance Sustainable finance refers to financial activities that take into account environmental, social, and governance (ESG) factors. On the investment side, this includes investments that promote sustainable development, such as renewable energy, green infrastructure, and sustainable agriculture. It also involves integrating ESG factors into investment decision-making processes and measuring the impact of investments on ESG outcomes. On the capital raising side, it also includes financing decisions related to ESG factors, for example issuing bonds which proceeds will be used exclusively to finance pre-defined environmental projects or borrowing loans where the pricing is a function of performance on ESG pre- defined KPIs. Family businesses in Asia are recognizing the importance of sustainable finance, allowing them to benefit from a first-mover advantage in sustainability. The role of the ‘NextGen’ in pushing through a sustainability agenda cannot be underestimated Insight Biz@HKUST 44